ACCT205 Week 3 Discussions and Responses.docx

The depreciation under the tax rules reduces taxable

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would use the accelerated depreciation method as a benefit, because it brings a reduction in taxes. “The depreciation under the tax rules reduces taxable income and taxes due.” Wainwright, (Ed.). (2012). When there is a cost for maintenance and repair costs there will be a significant increase of asset later down the road, this is when the accelerated depreciation method would be utilized by a company.
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Again, good post! Wainwright, S. K. (Ed.). (2012). Principles of Accounting: Volume I [Electronic version]. Retrieved from Discussion 2 Response 2 Alexander Wrote Depreciation is the reduction in value that occurs to an item typically caused by age and wear and tear. Understanding this concept will people stay ahead of materialistic investments such as equipment or vehicles if they do not plan to keep them for a very extended amount of time. I believe that the most useful method of tracking depreciation for equipment would be the straight-line method. I do not think that units of activity method applies because equipment typically does not have a limited number of uses so long as it is properly maintained. The DDB (or double declining balance) however was a more likely contender. I chose straight-line over this because this seems more applicable to things that have a “wow” factor when brand new, such as a car. Equipment for production does not have this, so I believe the depreciation will be a steady one so long as it is properly maintained. My Response Alexander, Good Post! You explained depreciation and went straight to the point with it. According to our text depreciation “is the process of allocating an asset’s cost to all accounting periods benefited by the asset’s use (i.e., spread the cost over the asset’s service life)” Wainwright, (Ed.). (2012). I agree the accelerated method of straight-line would be advantageous to the company because it is first of all, the most popular method used by most companies. It also allows for the buyer to extend the depreciation allocation over the entire life of the equipment evenly and it also lowers taxable income and increases net income. Please correct me if I am wrong. The straight line accelerated method is used for tax purposes to lower the taxable amount, and taxes allocated. But overall, again, good post! Wainwright, S. K. (Ed.). (2012). Principles of Accounting: Volume I [Electronic version]. Retrieved from
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